Average Cost Method Accounting is a means of valuing the inventory on hand for businesses and organizations. It uses the cost of goods purchased or manufactured, allocated to all units of inventory on hand at cost. This method assigns the weighted average cost per unit to all inventory items, no matter when they enter the business’s possession. This allows companies to easily and accurately budget expenses, gain a more accurate understanding of their overall financials, and stay in compliance with relevant accounting standards. By utilizing the Average Cost Method, businesses can better optimize their resources and maximize their profits.